Asian freight rates for VLCCs jump

Asian freight rates for Very Large Crude Carriers (VLCCs) loading from the Middle East jumped more than 33 percent, as higher global demand for crude ahead of the peak winter season lifted tanker bookings.
Rates for VLCCs on the benchmark Middle East Gulf-to-Japan route rose some 20 points from levels seen the previous week, at W80, and about 4-5 points above Tuesday's Baltic Exchange settlement.
"This is the relief we have all been expecting, and we see that this is going to be sustained through the end of the year," a Singapore-based shipbroker said. VLCC bookings globally jumped to 46 from 15, with bookings to Asia up 23 percent at 16, a survey of shipbrokers showed.
Bookings from the Middle East to the United States rose more than 80 percent from the previous week to nine bookings, and shipbrokers anticipate that bookings on this route will continue to compete with Asian tonnage demand.
"What you are going to see is a competition for tonnage from charterers looking to move cargoes from the Gulf to the US, and this should keep the market well supported at least into December," a shipowner said.
US crude oil stocks were seen rising last week on higher imports to meet demand for feedstock for winter production, a Reuters survey found. The poll of nine analysts showed average forecast of a 1.2 million-barrel increase in crude oil stocks, with crude imports seen rising by as much as 300,000 barrels.
Refinery utilisation in the United States is also seen to have risen and likely to keep demand for crude firm. "This is peak demand season for heating oil, the refineries will be revving up to meet the domestic requirements, so they will be bringing in more crude," a Singapore-based trader said.
Rapidly rising transport fuel costs have also added to the upward momentum of freight rates over the past few weeks. About 60-70 percent of ship operating costs are linked to bunker fuel purchases, shipowners said.
Singapore bunker prices hit $486 on Tuesday, but broke above $500 a tonne earlier this month as oil futures surged to record highs. And on Wednesday, traders were talking about bunker prices hitting $500 shortly, as US oil traded at $98.93 a barrel at 0500 GMT, up 90 cents from the previous settlement. US light crude reached new records of $99.29 a barrel earlier in the day.